Discounted Cash Flow Calculation for NasdaqGS:PDD using 2 Stage Free Cash Flow to Equity Model
The calculations below outline how an intrinsic value for
is arrived at by discounting future cash flows to their present value using the 2 stage method.
We try to start with analysts estimates of free cash flow, however if these are not available we use the most recent financial results. In the 1st stage we continue to grow the free cash flow over a 10 year period, with the growth rate trending towards the perpetual growth rate used in the 2nd stage. The 2nd stage assumes the company grows at a stable rate into perpetuity.
NasdaqGS:PDD DCF 1st Stage: Next 10 year cash flow forecast
Amount off the current price
is available for.
Share price is
vs Future cash flow value of
Current Discount Checks
to be considered undervalued it must be available for at least 20% below the
current price. Less than 40% is even better.
Pinduoduo's share price is below the future cash flow value, and at a moderate discount (> 20%).
Pinduoduo's share price is below the future cash flow value, but not at a substantial discount (< 40%).
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for
it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
is considered below, and whether this is a fair price.
Price based on past earnings
Pinduoduo's earnings available for a low price, and how does
this compare to other companies in the same industry?
Pinduoduo's earnings are expected to grow significantly at over 20% yearly.
Pinduoduo's revenue is expected to grow significantly at over 20% yearly.
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can
be gauged below. We look back 3 years and see if they were any good at
predicting what actually occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
Pinduoduo's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent
earnings report. Some checks require at least 3 or 5 years worth of data.
has a total score of
0/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
Management is one of the most important areas of a company. We look at
unreasonable CEO compensation, how long the team and board of directors have
been around for and insider trading.
TENURE AS CEO
Mr. Huang Zheng is a Founder of Pinduoduo Inc. and has been its Chairman of the Board of Directors and Chief Executive Officer since 2015. Mr. Zheng employed at Ouku.com in the position of Chief Executive Officer and Founder. Mr. Huang is a serial entrepreneur with significant experience and expertise in the technology and internet sectors in China. Prior to founding company, Mr. Huang founded Xinyoudi Studio in 2011 to develop and operate online games. Prior to that, Mr. Huang founded Ouku.com, a company that operated an online B2C platform for consumer electronics and home appliances, which was subsequently sold in 2010. Mr. Huang started his career at Google's (Nasdaq: GOOG) headquarters in 2004 as a software engineer and project manager. Mr. Huang subsequently relocated to China and was part of the team that established Google China. Mr. Huang was trained as a data scientist and has published numerous works on the subject of data mining, including in top peer reviewed journals, and presented his works in a number of international conferences, such as the ACM SIGMOD Conference and International Conference on Machine Learning. Mr. Huang received his bachelor's degree in computer science from Zhejiang University and his master's degree in computer science with a focus on data mining from University of Wisconsin-Madison.
Insufficient data for Huang to compare compensation growth.
Insufficient data for Huang to establish whether their remuneration is reasonable compared to companies of similar size in United States of America.
Management Team Tenure
Average tenure and age of the
management team in years:
The tenure for the Pinduoduo management team is about average.
Senior Vice President of Operation
Chief Technology Officer
Investor Relations Officer
Senior Vice President of Product Development
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The average tenure for the Pinduoduo board of directors is less than 3 years, this suggests a new board.
Board of Directors
Who owns this company?
Recent Insider Trading
No 3 month individual insider trading information.
Is Pinduoduo Inc. (NASDAQ:PDD) A Financially Strong Company?
Given zero long-term debt on its balance sheet, Pinduoduo has no solvency issues, which is used to describe the company’s ability to meet its long-term obligations. … Looking at PDD’s CN¥25b in current liabilities, the company has been able to meet these commitments with a current assets level of CN¥47b, leading to a 1.9x current account ratio. … The current ratio is calculated by dividing current assets by current liabilities.
Estimating The Intrinsic Value Of Pinduoduo Inc. (NASDAQ:PDD)
(NASDAQ:PDD) by taking the expected future cash flows and discounting them to their present value. … Generally we assume that a dollar today is more valuable than a dollar in the future, so we need to discount the sum of these future cash flows to arrive at a present value estimate: 10-year free cash flow (FCF) forecast 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Levered FCF (CN¥, Millions) CN¥8.71k CN¥15.40k CN¥16.89k CN¥18.17k CN¥19.28k CN¥20.27k CN¥21.16k CN¥21.98k CN¥22.76k CN¥23.51k Growth Rate Estimate Source Est @ 12.64% Analyst x1 Est @ 9.67% Est @ 7.58% Est @ 6.13% Est @ 5.11% Est @ 4.4% Est @ 3.9% Est @ 3.55% Est @ 3.3% Present Value (CN¥, Millions) Discounted @ 11.36% CN¥7.82k CN¥12.42k CN¥12.23k CN¥11.82k CN¥11.26k CN¥10.63k CN¥9.97k CN¥9.30k CN¥8.65k CN¥8.02k Present Value of 10-year Cash Flow (PVCF)= CN¥102.11b "Est" = FCF growth rate estimated by Simply Wall St The second stage is also known as Terminal Value, this is the business's cash flow after the first stage. … NasdaqGS:PDD Intrinsic value, May 14th 2019 The assumptions We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows.
Pinduoduo Inc.'s (NASDAQ:PDD) Shift From Loss To Profit
The US$29b market-cap company announced a latest loss of -CN¥10.3b on 31 December 2018 for its most recent financial year result. … I’ve put together a brief outline of industry analyst expectations for PDD, its year of breakeven and its implied growth rate … See our latest analysis for Pinduoduo
Is Pinduoduo Inc. (NASDAQ:PDD) A Financially Strong Company?
Common characteristics for these big stocks are their strong balance sheet and high market liquidity, which means there's plenty of stocks available to the public for trading. … In times of low liquidity in the market, these firms won’t be left high and dry. … Using the most recent data for PDD, I will determine its financial status based on its solvency and liquidity, and assess whether the stock is a safe investment.
An Intrinsic Calculation For Pinduoduo Inc (NASDAQ:PDD) Shows It's 31.67% Undervalued
by taking the expected future cash flows and discounting them to their present value. … Discounted Cash Flows (DCF). … If you want to learn more about discounted cash flow, the basis for my calcs can be read in detail in the Simply Wall St analysis model
Pinduoduo Inc., through its subsidiaries, operates an e-commerce platform in the People's Republic of China. It operates Pinduoduo, a mobile platform that offers a range of products, including apparel, shoes, bags, mother and childcare products, food and beverage, fresh produce, electronic appliances, furniture and household goods, cosmetics and other personal care items, sports and fitness items, and auto accessories. The company was formerly known as Walnut Street Group Holding Limited and changed its name to Pinduoduo Inc. in July 2018. Pinduoduo Inc. was founded in 2015 and is based in Shanghai, the People's Republic of China.
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